Currency to blow hot and cold for drug giants

By Ben Hirschler

LONDON (Reuters) - Currency effects will help AstraZeneca, which reports in dollars, when it unveils quarterly results in the week ahead but larger rival GlaxoSmithKline is set to see profits fall as a strong pound bites.

Foreign exchange fluctuations will have an outsize influence on Britain's two biggest drugmakers, reflecting the dollar's 12 percent fall from a year ago against the pound and their heavy reliance on the U.S. market for revenues.

Glaxo (GSK.L), Europe's biggest drugmaker, is expected to see a 2 percent slide in earnings per share while AstraZeneca should jump 14 percent, according to a Reuters poll of 18 analysts.

Glaxo was already facing a tough comparison with a strong quarter a year ago and will also be hit by U.S. generic competition to anti-nausea drug Zofran, antidepressant Wellbutrin XL and Flonase for allergies.

Its results may well be something of a damp squib by comparison with rivals like Merck & Co. Inc. (MRK.N), Wyeth WYE.N and Roche Holding (ROG.VX), which all beat analyst expectations this week.

But succeeding quarters should be better and analysts expect the group to reiterate its full-year forecast of 8 to 10 percent EPS growth at constant exchange rates.

Beyond the numbers, investors will be heavily influenced by any updates on Glaxo's large, but untested, pipeline of new medicines -- particularly prospects for Cervarix, the cervical cancer vaccine now under review with regulators, and its recently launched breast cancer pill Tykerb.

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